Should your business add a PTO buying feature to its cafeteria plan?
With the pandemic behind us and a red-hot summer in full swing, many of your company’s employees may be finally rediscovering the uninhibited joys of vacation. They might be having so much fun that they might highly value being able to buy even more paid time off (PTO) as an employee benefit. Such a thing is possible if your business sponsors a cafeteria plan. A “PTO buying” feature under a cafeteria plan allows employees to prospectively elect, during open enrollment, to buy additional PTO beyond that which they’d otherwise receive. The rules for PTO buying are complex. For example, the feature cannot defer compensation from one plan year to the next. Contact us for more information.
Pocket a tax break for making energy-efficient home improvements
The recent heat wave may have you thinking about making your home more energy efficient. Thanks to a 2022 law, you may be able to benefit from a residential energy tax credit to help defray the cost of energy improvements made on or after Jan. 1, 2023. The credit equals 30% of certain expenses to a home located in the U.S., including: qualified energy efficiency improvements installed during the year, residential energy property expenses and home energy audits. The max annual credit you can claim each year is: $1,200 for energy property and certain home improvements with limits on doors ($250 per door/$500 total), windows ($600 total) and home energy audits ($150). Contact us with questions.
The advantages of using an LLC for your small business
If you operate your small business as a sole proprietorship, you may have thought about forming an LLC to protect your assets. Like corporate shareholders, LLC owners (or members) generally aren’t liable for the debts of the business except to the extent of their investments. So their personal assets are protected from the entity’s creditors. Plus, partnership earnings aren’t subject to an entity-level tax. Instead, they “flow through” to the owners (in proportion to their interests), are reported on the owners’ individual returns and taxed only once. To the extent the income passed through to you is qualified business income, you can claim the pass-through deduction, subject to limitations.
Tips for Creating Better Machine Shop Workflow
These five design factors will help manufacturing operations achieve a more efficient, effective, and sustainable process flow – and promote opportunities for growing the business. Originally posted in American Machinist. Read the full article here! Manufacturing businesses like machine shops, and the supply chains that serve them, have multiple moving parts that can be […]
Consider adverse media screening to vet vendors, customers and others
“Adverse media screening” is a common part of many commercial lenders’ due diligence processes. Essentially, a prospective borrower is “screened against” various media sources to determine whether the person or entity has been party to any suspicious, unethical or illegal activity. Many businesses now use adverse media screening to evaluate key vendors, project partners or major customers. If your company is considering this practice: 1) Develop a formal policy reviewed by an attorney. 2) Create categories to investigate, such as “civil proceedings.” 3) Verify everything carefully. 4) Consider AI-based software to automate the process. Contact us for help assessing the costs involved.
Moving Mom or Dad into a nursing home? 5 potential tax implications
If your parent is entering a nursing home, you’re probably not thinking about taxes, but there may be tax breaks. For example, the costs of qualified long-term care are deductible as medical expenses to the extent they, along with other medical expenses, exceed 7.5% of adjusted gross income (AGI). If your parent qualifies as your dependent, you can include any medical expenses you incur for your parent along with your own when determining your medical deduction. Premiums paid for a qualified long-term care insurance contract are deductible as medical expenses (subject to limitations based on age) to the extent they, along with other medical expenses, exceed the percentage-of-AGI threshold.
A tax-smart way to develop and sell appreciated land
Let’s say you own highly appreciated land you’d like to develop. If you subdivide it and sell the parcels off for a hefty profit, you could receive a large tax bill. The tax rules will generally treat you as a real estate dealer. That means the entire profit will be treated as high-taxed ordinary income subject to a rate of up to 37%. You may also owe the 3.8% net investment income tax for a rate of up to 40.8% and state income tax. But you may be able to pay lower long-term capital gain (LTCG) tax on part of the profit. How? By establishing an S corp and selling the land to it, which may allow you to treat pre-development appreciation of the land as LTCG. Contact us to learn more.
Improving your company’s sales pipeline management
A sales pipeline identifies and quantifies the prospective deals a business has in progress at various stages of its sales process. Properly managing your pipeline can help your company avoid losses and meet or even exceed its revenue goals. Generally, the six stages of a pipeline are: 1) Lead generation. 2) Lead qualification. 3) Engagement with a lead. 4) Relationship building. 5) Deal negotiation. 6) Closing. Various pipeline-related metrics can enable you to channel data into accurate sales forecasts, which can in turn help you devise effective sales strategies. Sales pipeline management software or customer relationship management software can help as well. Contact us for more info.
Retirement account catch-up contributions can add up
If you’re age 50 or older, you can probably make extra catch-up contributions to your tax-favored retirement account(s). It is worth the trouble? Yes! Eligible taxpayers can make extra catch-up contributions of up to $1,000 annually to a traditional or Roth IRA. If you’ll be 50 or older as of Dec. 31, 2023, you can make a catch-up contribution for 2023 by April 15, 2024. However, there are income limits on the privilege. You also have to be age 50 or older to make extra salary-reduction catch-up contributions to an employer 401(k), 403(b), or 457 retirement plan (assuming the plan allows them and you signed up). You can make extra contributions of up to $7,500 to these accounts for 2023.
Corporate officers or shareholders: How should you treat expenses paid personally?
If you play a major role in a closely held corporation, you may sometimes spend money on corporate expenses personally. In general, you can’t deduct an expense you incur on behalf of your corporation even if it’s a legitimate business expense. That’s because you can only deduct expenses that are your own and the corporation is a separate legal entity. And the corporation won’t generally be able to deduct them either because it didn’t pay them. One solution is to arrange to have the corporation reimburse you for expenses you incur. Turn the receipts over to the corporation and use an expense reimbursement claim form or system. Then, the corporation can deduct the reimbursement amount.
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